In order to thoroughly implement the spirit of the Central Financial Work Conference and the Several Opinions of the State Council on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market (hereinafter referred to as the "Opinions"), implement the requirements of policy documents such as the Opinions on Strengthening the Supervision of Listed Companies (Trial) issued by the China Securities Regulatory Commission, promote the high-quality development and investment value enhancement of listed companies, and standardize the disclosure of information related to the sustainable development of listed companies, on April 12, the Shanghai and Shenzhen North Stock Exchange officially issued the Guidelines for Sustainable Development Reporting of Listed Companies (hereinafter referred to as the "Guidelines") ), and will be implemented from May 1, 2024.
On February 8, under the guidance of the China Securities Regulatory Commission, the three Shanghai and Shenzhen North Stock Exchange issued the "Guidelines" and solicited public opinions. It is reported that after the release of the draft for comments, it has received widespread attention at home and abroad, and more than 80 feedback opinions have been received during the consultation period.
"All parties in the market highly affirmed the positive significance of the issuance of the Guidelines, believing that the Guidelines will help provide standardized, comparable and high-quality information, highlight the investment value of high-quality companies, and attract medium and long-term funds. Market sources said.
Nine aspects of clarifying the information disclosure framework for sustainable development reports
Overall, the official release draft of the Guidelines has a total of 6 chapters and 63 articles, clarifying the information disclosure framework for sustainability reports, and setting 21 specific topics from three aspects: environmental, social and corporate governance.
Among them, the chapter on environmental information disclosure sets up 8 topics such as climate change, pollutant emissions, ecosystem and biodiversity conservation, energy utilization, and circular economy, 9 topics such as rural revitalization, social contribution, innovation-driven, and employees in the chapter on social information disclosure, and 4 topics such as stakeholder communication and anti-unfair competition in the chapter on information disclosure related to sustainable development.
Specifically, in terms of reporting entities and disclosure time, companies that continue to be included in the sample of SSE 180, STAR 50, SZSE 100 and ChiNext indices during the reporting period, as well as companies listed at home and abroad at the same time, should disclose the Sustainability Report in accordance with the requirements of the Guidelines, and encourage other listed companies to disclose them voluntarily. The Sustainability Report shall be prepared in accordance with the Guidelines within 4 months after the end of each fiscal year and shall be disclosed after being reviewed and approved by the Board of Directors, and the disclosure time shall not be earlier than the annual report, and the reporting entity and reporting period shall be consistent with the annual report.
In terms of the principle of dual materiality, listed companies should take into account the characteristics of their own industry and business operations, and identify whether each issue is expected to have a significant impact on the company's business model, business operations, development strategy, financial position, operating results, cash flow, financing methods and costs in the short, medium and long term (financial materiality), and whether the performance of the enterprise on the corresponding issues will have a significant impact on the economy, Significant social and environmental impact (impact materiality) and describe the process of analyzing the importance of the issue.
In terms of the disclosure framework of material issues, financially important sustainability issues should be analyzed and disclosed around the four core contents of "governance, strategy, impact, risk and opportunity management, indicators and targets", and if the disclosure entity is only important for impact, it should be disclosed in accordance with the relevant provisions of the Guidelines, so that investors and stakeholders can fully understand the actions taken by listed companies to respond to and manage sustainability-related impacts, risks and opportunities.
In terms of climate change disclosure requirements, in addition to disclosing climate change-related governance, strategies, impacts, risk and opportunity management, indicators and targets, etc., listed companies should further disclose climate adaptation, transition plans, total greenhouse gas emissions, emission reduction measures, carbon emissions-related opportunities, etc., in accordance with Chapter 2 of the Guidelines. Companies with the capacity are encouraged to disclose Scope 3 greenhouse gas emissions, conduct climate adaptation assessments by means of scenario analysis, and engage third-party institutions for verification or verification.
In terms of environmental information disclosure requirements, in addition to addressing climate change issues, the chapter on environmental information disclosure also sets up important topics such as pollutant discharge, waste disposal, ecosystem and biodiversity conservation, environmental compliance management, circular economy, energy utilization, and water resource utilization.
In terms of social information disclosure requirements, Chapter 4 of the Guidelines sets out important topics such as rural revitalization, social contribution, innovation-driven, science and technology ethics, supply chain security, equal treatment of small and medium-sized enterprises, product and service safety and quality, data security and customer privacy protection, and employees. Listed companies shall, in accordance with the Guidelines, disclose the impacts, risks and opportunities involved in the relevant issues, the specific measures taken by the company, and the specific results achieved.
In terms of sustainability-related governance information disclosure requirements, listed companies should actively integrate the concept of sustainable development and specific measures into various systems and processes of corporate governance, further improve and improve the corporate governance mechanism, and encourage the disclosure of due diligence to identify and respond to negative impacts and risks related to sustainable development. In addition, it should also disclose the communication with stakeholders, including investors, anti-commercial bribery, anti-corruption, and anti-unfair competition.
In terms of the transitional arrangements, listed companies that are required to disclose their sustainability reports in accordance with the Guidelines should publish their 2025 Sustainability Reports prepared in accordance with the Guidelines by 30 April 2026. Listed companies should make relevant technical, data and internal governance arrangements in advance, and encourage listed companies to disclose their 2024 Sustainability Report in advance in accordance with the provisions of the Guidelines.
In terms of mitigation measures, listed companies in the first reporting period are not required to disclose the year-on-year changes in relevant indicators, and for indicators that are difficult to disclose quantitatively, they can make qualitative disclosures and explain the reasons why they cannot be quantitatively disclosed, unless the relevant indicators have been quantitatively disclosed in the previous period.
Incorporate and adopt various opinions and make a number of important amendments
It is reported that during the consultation period, the exchange received more than 80 feedbacks. In response to the suggestions collected in the process of soliciting public opinions, the China Securities Regulatory Commission and the three exchanges of Shanghai, Shenzhen and North China attach great importance to and carefully study them, and most of them have been fully absorbed and adopted.
The first is to clarify the disclosure requirements for different material topics. The amendments clarify that financially material issues need to be disclosed in accordance with a four-element framework, namely "governance", "strategy", "impact, risk and opportunity management", and "metrics and targets", in order to maintain the convergence with international sustainability information disclosure standards. For issues that are only of impact importance, disclosure is sufficient according to the relevant indicators of the specific issue.
The second is to increase the details of topics. The list of issues included in the Guideline is directly set out in the annex to the Guidelines, which is convenient for companies to implement.
The third is to make a bridging arrangement for the disclosure of social responsibility reports. The amendment clarifies that listed companies that are required to disclose their social responsibility reports are not required to disclose their social responsibility reports if they disclose or voluntarily disclose their sustainability reports in accordance with the Guidelines.
Fourth, some disclosure requirements should be appropriately relaxed. On the one hand, the disclosure time of the sustainability report is only required to be disclosed before April 30, but it is not required to be disclosed at the same time as the annual report, so as to alleviate the pressure on listed companies to disclose the annual report and sustainability report in a centralized manner.
On the other hand, for some difficult quantitative disclosures, the requirement to add qualitative alternative to disclosure mitigation measures, and for the expected financial impact, the adaptability assessment of issues other than climate change has been revised from mandatory disclosure to encouraged disclosure, so as to appropriately alleviate the pressure on corporate disclosure.
Fifth, improve the specific disclosure requirements and wording. On the one hand, it integrates and optimizes some topic chapters, such as a separate section on innovation-driven and scientific ethics, a separate section for suppliers and customers, and further clarifies the corporate governance part as corporate governance related to sustainable development, so as to facilitate the connection with the corporate governance chapter of the annual report.
On the other hand, new disclosure requirements for stakeholder management, due diligence, flexible employment, financial inclusion, and carbon emission trading have been added, allowing for the integrated disclosure of governance-related information, and increasing exemptions for retrospective adjustment of data.
Rating agencies responded positively, and the China Shanghai Association issued a supporting report
It is understood that for the release of the "Guidelines", index and ESG rating agencies such as China Securities Corporation, China Securities Corporation, Wind, SynTao, and China Chengxin International have closely followed the requirements of the Exchange's sustainability report guidelines, actively incorporated the guidelines into the ESG rating system, and continued to strengthen the construction of the domestic ESG rating system.
At the same time, in accordance with the work deployment of the China Securities Regulatory Commission (CSRC) and the demands and opinions of listed companies, the China Association of Listed Companies (CAC) has issued a series of comparative analysis reports on the Guidelines and the Overseas Sustainable Information Disclosure Standards to help listed companies, especially those listed in multiple places, reduce the cost of information disclosure, and at the same time strengthen the awareness and understanding of the Guidelines by domestic and foreign investors and relevant entities, so as to provide reference between listed companies and market parties.
The China Association of Public Companies (CACTO) has organized a comparative analysis of the Guidelines with relevant overseas information disclosure standards and rules such as the International Sustainability Standards Board (ISSB), the Global Reporting Initiative (GRI), and the U.S. Securities and Exchange Commission (SEC), forming a series of reports to help listed companies, especially those listed in multiple places, reduce the cost of information disclosure, and strengthen the awareness and understanding of the Guidelines by domestic and foreign investors and relevant entities.
It is reported that in the next step, under the unified deployment of the China Securities Regulatory Commission, the three Shanghai and Shenzhen North exchanges will do a good job in market training and other services, formulate more detailed disclosure guidelines in a timely manner, provide specific guidance for listed companies to implement the provisions of the "Guidelines", and support relevant departments to do a good job in ESG rating, index development and investment, etc., to further enhance positive incentives and promote the construction of a good sustainable ecology.
In addition, the Shanghai, Shenzhen and North Stock Exchange will also evaluate and expand the scope of mandatory disclosure entities in a timely manner according to the implementation of the Guidelines, promote more listed companies to disclose high-quality sustainable development information, and promote the high-quality development of listed companies.
Source: The Paper
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